An Irishman’s Diary – From the tontine to the guillotine

Marie Antoinette and Irish finance

That ill-fated queen of France, Marie Antoinette, never set a dainty foot in Ireland, so far as I know. Indeed, according to the besotted Edmund Burke, she “hardly seemed to the touch” the ground in general. But she did once dip a toe into the world of Irish finance. Or perhaps, to be more correct, she had it dipped there by others.

The occasion was the Irish Tontine of 1777, an official fundraising scheme of a kind named after the 17th-century Italian banker who popularised it, Lorenzo de Tonti.

As readers of gothic crime novels may know, the key feature of a tontine is that is it tied to the life expectancy of the shareholders, or their nominees. The longer these live, the greater the nominators’ benefit. Equally, the sooner others die off, the higher the annual dividends.

In practice, it wasn’t as crude as it sounds. Like most financial instruments, tontines became ever-more sophisticated, with hedges and sub-shares and derivatives.

But since the last survivors did stand to inherit all, there could be an obvious motive to speed up the natural mortality rate.

It happened occasionally, at least in crime fiction.

The lives tied to the shareholdings were sometimes those of the investors themselves, often of their younger relatives (there were different classes of share, depending on the age of the nominee), and occasionally even of strangers.

One way to guard against sinister events was to nominate a “public” life as the one on which your investment depended. This could double as an apparent act of patriotism (“long live the king/queen”) and a form of insurance.

The big advantage of tontines for shareholders was that, if they did live long enough, their annuities increased with age and responsibility. The advantage for the governments that backed the early schemes was that they ultimately inherited the capital, after the last shareholder died.

But there were many complications, and many opportunities for fraud, which sooner or later ensured the banning or curbing of tontines in most countries.

Life expectancy

Tontines were first popular in the Netherlands, and later France, where De Tonti had lived much of his life (although he spent years in the Bastille and died before seeing his schemes adopted). By contrast, they never worked in England, and were effectively banned there in 1776.

But the law didn’t extend to Ireland. And the British government being in dire need of money for the American wars, it backed three Irish tontines in the 1770s, all fully subscribed, including the 1777 one, which raised £175,000.

A feature of the Irish tontines was the large-scale involvement of investors from Geneva, who were learning how to “game” the system. In 1777, they tied their combined £50,000 investment to the life expectancies of 50 young girls, aged three to seven, from families known for longevity.

The plan worked well. Forty years later, 64 per cent of the nominees were still alive, compared with 42 per cent of their age cohort in the rest of the tontine.

Smaller investors in 1777 included the founder of the Presentation Sisters, Nano Nagle, whose £100 share nominated the life of a younger nun, to whom she later bequeathed it. Another £100, from persons unknown (at least to me), was tied to the fate of Marie Antoinette. Aged 21 in 1777 (although it says 20 on the tontine list), she must have seemed a safe bet.

In Reflections on the Revolution in France, a saddened Burke recalled his enchantment at having seen the future queen at Versailles in the mid-1770s. Her country was then “a nation of gallant men,” he said, in which he thought “ten thousand swords must have leaped from their scabbards, to avenge even a look that threatened her with insult”. Alas, he now knew, “the age of chivalry is dead”.

In fact it wasn’t quite dead in Burke’s native Ireland, where in 1792 a plot was hatched to free the queen from prison and get her out of France on a wine-merchant’s ship.

Had it succeeded, she would have landed in Dingle. But she refused to leave her family, and the chance was lost. Doomed to the guillotine, she trod lightly to the end, or nearly. Among her last words, she is said to have begged pardon from her executioner after accidentally stepping on his foot.